Ethiopia's Commercial Bank Confronts Financial Setback After System Glitch Leads to Unauthorized $40M Withdrawals

louis Buyisiwe

Mar 20, 2024

At least three universities have released statements advising students to return any money not belonging to them that they may have taken from CBE.

Anyone returning money will not be charged with a criminal offence, Mr Sano said.

But it's not clear how successful the bank's attempts to recoup their money has been so far.

The student from Jimma University said on Monday he had not heard of anyone giving the money back, but said he had seen police vehicles on campus.

More than 38 million people hold accounts at CBE, which was established 82 years ago. Ethiopia's central bank, which serves as the financial sector's governing body, released a statement on Sunday saying "a glitch" had occurred during "maintenance and inspection activities". The statement, however, focused on the interrupted service that occurred after CBE froze all transactions. It did not mention the money withdrawn by customers. Mr Sano did not say exactly how much money was withdrawn during Saturday's incident, but said the loss incurred was small when compared to the bank's total assets. — The Ethiopia's biggest commercial bank is scrambling to recoup large sums of money withdrawn by customers after a systems glitch

Addis Ababa, Ethiopia – In a startling turn of events, the Commercial Bank of Ethiopia (CBE), the nation's largest banking institution, is in the throes of a financial dilemma following a system malfunction that allowed customers to withdraw funds exceeding their account balances. The anomaly, detected early Saturday, resulted in over $40 million being illicitly withdrawn or transferred, causing a significant upheaval within the banking community.

Rapid Response to Unprecedented Glitch

The glitch, which spread like wildfire among the student population, primarily through messaging apps and direct communications, led to unusual activity at numerous CBE ATMs, particularly on university campuses. Eyewitnesses recounted scenes of long queues at ATMs as students capitalized on the system's vulnerability to extract funds unlawly.

Abe Sano, President of CBE, addressing the media, highlighted the immediate measures taken to curb the financial hemorrhage, including halting transactions to assess and rectify the situation. Despite the swift intervention, the bank faced substantial withdrawals before the system could be secured.

Central Bank's Assurance Amidst Financial Turmoil

Ethiopia's central bank issued a statement attributing the glitch to maintenance activities, ensuring the public that the integrity of personal banking information remains uncompromised. The focus was directed towards the service disruption following the freeze on transactions, with a notable omission of the financial losses incurred.

Educational Institutions Advocate Ethical Conduct

In a commendable move, several universities have issued advisories urging students to act ethically by returning the misappropriated funds. In an assurance from Mr. Sano, individuals complying with this request will face no criminal charges, emphasizing the bank's intent to resolve the matter amicably.

Community Response and Recuperation Efforts

The aftermath has seen mixed responses, with some students voluntarily returning funds, aided by CBE personnel's presence on campuses. However, the overall success of these recuperation efforts remains uncertain, as reports of returned funds are sporadic.

As CBE navigates through this financial predicament, the incident serves as a stark reminder of the fragility of digital banking systems and the paramount importance of robust security measures. The bank reassures its clientele, emphasizing the minor impact of the losses against its vast asset portfolio and dismissing concerns of a potential cyber-attack.